Svmuu News: Analyst Matthew Weller said that whether inflation has peaked is the market’s top concern ahead of the June CPI report.For the first time in three months, the Strait of Hormuz was partially reopened in the second half of June, leading to a sharp drop in energy prices, while the lagged effects of the now-expired “Liberation Day” tariffs on Donald Trump may have been largely priced in by the market.Against this backdrop, traders and economists expect the month-over-month headline inflation rate to post its first negative reading in over a year, which would ease market concerns about an imminent Fed rate hike.
The federal funds futures market currently prices in a 35% probability of a rate hike at this month’s Fed meeting, following a relatively hawkish tone at last month’s meeting under new Fed Chair Wash.Although the hawkish outlook may be overly optimistic, an unexpected CPI report, coupled with Chair Wash’s testimony before both houses of Congress on Tuesday and Wednesday, could still trigger unusual volatility in major markets amid the uncertainty. (Jin Shi)